By Courtney Herring, Guest Contributor
The devastating effects of the deepening recession have caused many people both young and old to think critically about how they spend their money and, more importantly, how they borrow money. As a student sometimes it’s hard to negotiate the fact that your occupation doesn’t quite give you the financial freedom to do all the things you want or even need to do. So, in order to cover everything, most people take out student loans and get credit cards not fully knowing what they’re getting themselves into. Important indicators like “credit scores” seem like things we should worry about in a distant future, but all of these things – loans and various lines of credit – have the potential to dramatically affect your financial present and future. I have never been more aware of my financial decisions until recently. Times are tough for everyone, and hopefully these tips (or reminders) can help prevent you from getting into debt or sinking further in it. Additionally, I highlight some web-based media sources that help make your financial life easier.
It’s probably more feasible to get a Federal student loan than a private bank loan When considering where to take out a student loan from, consider all your options carefully. While researching about the smartest way to go about getting a student loan, I found this to be among one of the most frequent suggestions. The reason is simple: interest rates on Federal loans tend to remain fixed and are likely lower, while private banks have the discretion to have higher rates and raise them.
Check your credit score often Even if you consider yourself broke, it’s important to do a periodical check of your credit report and credit score. With the onslaught of identity theft, one of the foremost things to get effected is your credit. Monitoring this every few months could prevent you from paying the price (literally) later. I use Freecreditreport.com when I want to check the status of my credit profile. Only one catch…if you forget to call and cancel the account you set up within 9 days, you incur a $15 charge every month. But, the solution is easy: as soon as you see your report and if all is well, cancel the the subscription immediately
BUDGET and Stick to it. Age-old information, right? Whether you’re making $100,000 a year or $1,000 a year, it’s important to know – at all times – what you’re spending your money on. Some people may argue that making a budget and sticking to it cramps your style or makes you look super cheap, but the peace of mind that you gain from having control over (the little) money you may be making is priceless. Media and technological advancements have made this task much easier. I use Mint.com to help me keep track of my budget. It’s free, easy to use, and it’s a great resource for keeping track of your weekly, monthly, and/or yearly spending trends through colorful pie charts and bar graphs.
Even in the midst of a deep recession, you can still be financially empowered!